OECD predicts Canada's economic growth to be best in G7

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However, the recovery of business investment and trade remain too low to sustain healthy productivity growth, the OECD said.

In a report released on Wednesday, ANZ economists David Plank and Felicity Emmett say this view reflects the more positive economic outlook and easing downside risks. Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives.

The OECD's United Kingdom forecasts were left unchanged at 1.6% for 2017 and 1.0% for 2018, as were those for the U.S. at 2.1% and 2.4% respectively. The unemployment rate has fallen to below 4.5%, but weak productivity and real wage growth persist.

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The world economy is seen growing 3.7 percent in 2018, up 0.1 point from the previous projection, after a 3.5 percent increase in the previous year, unchanged, the OECD said.

Japan's expected growth was also revised higher by 0.2 percentage point for this year and next, to 1.6 percent and 1.2 percent, respectively.

The risk of an interest rate rise next year has become a hot topic among economists following the recent run of strong jobs growth. That's up from the June forecast for 1.4 per cent in 2017 and 1.0 per cent in 2018. Global growth was 3.1% in 2016.

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Growth in the major emerging market economies has improved overall, helped by a rebound in some commodity producers and public infrastructure investment in China, although growth remains subdued in a number of oil-exporting economies. The investment bank said China's growth remains "on track" although it may soften from 6.9 percent in the second quarter to 6.7-6.8 percent in the third quarter.

The relative slowdown was due to the implementation of a goods and services tax and the sudden withdrawal late past year of higher denomination banknotes.

The country was benefiting from higher oil prices and lower interest rates which are giving a short-term boost to growth, it said. "Wage growth has been disappointing, keeping inflation at low levels", it said. That compared with an earlier outlook for growth of 1.8 per cent in 2017 and 1.8 per cent in 2018.

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